Wealth building can mean more than just earning a bigger paycheck. It also means knowing how to save more effectively, and how to use the money you've already saved to work for you.
While everyone's financial plan is different, there are a few key strategies almost anyone can use to help in your wealth building efforts.
How to Save
There are many different ways to increase your savings. Here are a few tips to help you get started.
Create a budget: Tracking exactly where and how you spend money is a solid wealth building strategy. Creating a monthly budget is an easy way to do this. First, make a list of your monthly sources of income. Next, make a list of your monthly expenses, including fixed expenses (mortgage payments, rent, utility bills) and variable expenses (groceries, entertainment, gasoline). Once you've done that, some quick math will show how much money you're either saving or losing per month. You can make adjustments to your variable expenses to help you increase your savings and meet your financial goals.
There are many resources online that can help you create and manage your budget. A few places you might want to check out are Mint.com, and BudgetSimple.com.
- Pay bills on time: Not paying late fees is another easy win in your wealth building playbook. An easy way to do this is to automate your bill payments. At Ally, you can pay your bills online with free online bill pay. You can set up one time payments or recurring payments. Some people find that setting up recurring payments helps them to consistently pay bills on time and avoid fees that detract from their overall savings plan.
- Avoid ATM fees: With ATM fees rising to as much as $5 per transaction, withdrawing cash from some ATMs can seriously impact your savings plan. One way to avoid paying these fees is to open an account with a bank that doesn't charge ATM fees. Ally Bank doesn't charge ATM fees and we reimburse for ATM fees other bank charge nationwide.
- Save automatically: Some people find that automating their savings helps them stick to their savings plan. You can do this by allocating a certain percentage of your paycheck to deposit automatically into your savings or checking account. The great thing about doing this is that you may not even miss the money. Over time, you might be surprised how quickly it can add up.
Where to Save
When it comes to strategic wealth building, where you save money can be just as important as how you save money. Here are a few accounts that can help you build wealth.
- Savings account: For many people, savings accounts are considered the lowest-risk place to park money while also earning interest. While you can typically access money in your savings account at any time, savings accounts usually have lower interest rates than CDs or retirement accounts. Some savings accounts offer higher interest rates than others. At Ally Bank, our Online Savings Account offers rates that are among the most competitive in the country.
Certificate of deposit (CD): A CD is a time deposit with a financial institution. That means when you open a CD, you usually put a fixed amount of money into the account for a fixed period of time. The money then earns interest at a fixed rate. CDs usually offer higher interest rates than savings accounts.
Most CDs have fixed terms, meaning you usually can't withdraw money from the CD until it matures without paying a penalty. Typically, the longer the CD's term, the higher its interest rate. For example, a 5-year CD will usually offer a higher interest rate than a 2-year CD.
Like many savings accounts, CDs that are FDIC insured are generally considered to be low-risk places to build wealth. You can learn more about the kinds of CDs Ally Bank offers by visiting our website.
- Retirement account: One of the most common types of accounts that people use when wealth building is a retirement account. This can include 401(k)s, IRAs, and Roth IRAs. Many financial experts agree that starting a retirement account early is one of the best ways to build wealth over the long-term. Each kind of retirement account offers different benefits, so it's important to learn which one is right for you. Learn more about Ally Bank IRA products.
Learning how and where to save money are two key steps in your wealth building strategy. Ally Bank offers a variety of products to help you build wealth and meet your financial goals. If you're interested in opening an Ally Bank account, visit our website to learn more about which account is right for you. You can open your account directly on our website, through the mail or by calling us 24/7 at 877-247-ALLY (2559).